Which of the following statements is TRUE concerning realized gains and losses of external investment pools?

When discussing realized gains and losses of external investment pools, it is important to understand the reporting requirements specific to these investments. The assertion that separate display is permitted in separately issued reports denotes that external investment pools can present these gains and losses in a manner that distinguishes them from other financial information. This approach enhances transparency and provides clearer insight into the performance of the investments.

The significance of this reporting method is that it allows users of the financial statements, such as investors or stakeholders, to easily assess the profitability of the investment pools without the distraction of other unrelated financial results. By allowing separate display in separately issued reports, entities can adhere to accounting standards that promote clarity and usefulness in financial reporting.

In contrast, the option stating that separate display is never permitted is inaccurate, as it overlooks the allowance for separate presentation of these financial components in certain contexts, particularly in standalone reports. The possibility for separate display in sponsor reports also reflects a more nuanced understanding of the flexibility in reporting, which is not as restrictive as the option suggesting no separate display whatsoever.

Thus, the correct understanding is that separate display is indeed permitted in separately issued reports, aligning with the framework for presenting investment information clearly and understandably.